Big changes are afoot at the Occupational Safety and Health Administration that significantly raise the stakes for companies that fail to provide safe workplaces.
Among the most significant developments that pose concerns for compliance officers include a dramatic increase in penalties and an expanding focus on who qualifies as an “employer” under the authority of OSHA. “Every employer should be terrified of OSHA right now,” says Valerie Butera, a member of the labor and employment practice of law firm Epstein Becker Green.
For the first time since 1990, OSHA has been authorized by Congress to increase its maximum civil monetary penalties to adjust for inflation. Mandated under a provision in the comprehensive Bipartisan Budget Act, signed into law by President Barack Obama in November, this one-time “catch-up adjustment,” will be calculated based on the Consumer Price Index (CPI), not to exceed the rate of inflation between 1990 and 2015.
That effectively means OSHA civil penalties could increase by roughly 82 percent, raising the maximum civil penalty for “serious” and “other than serious” violations from $7,000 to roughly $12,500 for each citation. “Willful” and “repeat” violations would increase from a current maximum fine of $70,000 to roughly $125,000 for each citation. These adjustments will take effect in August 2016.
Additionally, the Budget Act mandates OSHA to increase penalties annually thereafter to adjust for inflation. Beginning in January 2017, OSHA will be required to publish these penalty increases by Jan. 15 each year.
“Every employer should be terrified of OSHA right now.”
Valerie Butera, Member, Labor Practice, Epstein Becker Green
Although OSHA has the flexibility not to increase penalties as high as the maximum allowed, labor and employment law experts say that’s unlikely to be the case. In fact, OSHA Assistant Secretary of Labor David Michaels told a House sub-committee in October that the “most serious obstacle” to effective OSHA enforcement is the “low level of civil penalties allowed under our law, as well as our weak criminal sanctions.” He added that “OSHA’s current penalties are not strong enough to provide adequate incentives.”
Furthermore, in its 2016 budget request for OSHA enforcement, the Labor Department noted that “penalties for labor law violations are so low that unscrupulous employers treat them as the cost of doing business, and employers who play by the rules are put at a competitive disadvantage.”
The new penalty amounts should serve as a warning to compliance officers to reevaluate their health and safety programs and to ensure that senior management foster a culture of safety and compliance, rather than treating workplace hazards as a cost of doing business.
To reduce the risk of an OSHA citation, Butera recommends that companies review their safety and health compliance programs to ensure they’re up-to-date. Compliance officers should also ensure that employees receive all necessary safety training, can demonstrate that they understood the training, and that all training is documented, she says.
Butera further recommends that supervisors and managers assess the workplace for hazards and address any identified hazards as soon as possible. They should also communicate with union representatives or employees at non-unionized facilities about their safety concerns and immediately address any bona fide concerns.
Joint Employer Standard ?
The imminent increase in penalties comes at a time when OSHA is mulling the possibility of inspecting franchisor-franchisee relationships for possible joint employer liability under the Occupational Safety and Health Act. At issue is a draft memo circulating within OSHA that lays out what information OSHA inspectors should obtain to help them determine whether to impose joint employer status.
Below is an excerpt of a draft memo circulating within the Occupational Safety and Health Administration that describes what information OSHA inspectors should ask of companies to help determine whether to impose joint-employer status.
IV. Corporate control over safety and health policies and practices at the franchise
Does corporate provide franchisee with any type of safety program? If so, obtain copy.
If franchise has a safety program (obtain copy) what name is on the program?
Does corporate provide any instruction/information about protective equipment the franchise should have?
Does corporate provide to the franchisee any personal protective equipment?
Does corporate set any standards for safety training?
Does corporate provide safety training for franchisee managers?
Does corporate ask for any injury or illness information from the franchisee?
If corporate visits franchisee, does corporate look at OSHA 300 logs?
Does corporate conduct any type of safety evaluation of the franchisee?
Does corporate provide any instruction to franchisee about keeping injury and illness data?
Does corporate provide any forms to the franchise to use for investigation of accidents?
Does franchisee report any information to corporate about safety issues, including complaints from employees?
Can franchisee independently implement safety and health policies without any involvement of corporate?
Considerations in that memo include:
Corporate’s involvement in safety and health policies and practices of the franchisee
Whether corporate provides any type of safety program
Whether corporate provides any instruction/information about protective equipment the franchise should have
Whether corporate sets any standards for safety training
Whether corporate has safety training for the managers
OSHA circulated the draft memo days before the National Labor Relations Board in August issued its ruling in Browning-Ferris Industries of California, which jettisoned 30 years of precedent and redefined the concept of “joint employer” much more expansively. Under its new standard, the NLRB deems companies to be a joint employer if they exercise “indirect control” over terms and conditions of employment and where they merely have the right to exercise that control.
Labor and employment law experts speculate that the NLRB’s Browning-Ferris ruling likely will influence OSHA’s approach to inspections and citations involving temporary or contract employees, which effectively would make it more complicated for compliance officers to exert control over safety and health violations. Butter puts it another way: “I don’t think anyone is immune from OSHA inspections at this point.”
Under OSHA’s current multi-employer worksite citation policy, OSHA may cite more than one employer for a hazardous condition that violates an OSHA standard as it concerns multi-employer worksites across all industry sectors. Specifically, OSHA may cite an employer for hazards where that employer controlled the hazard, created the hazard, or was responsible for correcting the hazard.
If OSHA were to apply the NLRB’s reasoning in Browning-Ferris, however, that would mean that any company that relies on other businesses for contract labor, or uses a franchise business model for its operations, has a much greater risk of facing safety and health violations at those other businesses … even though the corporate entity is separate from those partners and may not be aware of any safety or health hazards.
According to the International Franchise Association, OSHA representatives have requested extensive documentation during “informal” investigations that far exceed normal OSHA procedure and protocol. “These questions appear to be directed at applying a new joint employer standard of liability at OSHA in order to demonstrate a joint employer relationship between corporate brands and franchise owners,” IFA said.
In a statement, Elizabeth Taylor, vice president of government relations, public policy, and counsel at IFA says the Labor Department is “conducting a witch hunt” that exceeds the statutory authority afforded to OSHA.
Proactive Measures ?
To avoid the risk of repeat violations, Howard Sokol, a partner with law firm Holland & Knight, recommends that multi-employer operations, especially those with many facilities or locations spread across the country, take the following actions:
Put in place a safety director to coordinate education, training, and compliance initiatives
Appoint a safety representative at each location to regularly monitor the local operation for safety compliance and report regularly to the company’s regional safety officers
If feasible, designate regional safety officers to self-evaluate the stores in their regions, regularly confer with each another, and report to the national safety director
Share safety information, especially those arising from any OSHA inspections or citations, with all regional officers, and discuss that information to immediately address and eliminate underlying potential or actual existing hazards at other locations
Dedicate, update, and make available real-time electronic databases to those charged with safety compliance company-wide, thereby allowing for expedient remediation and abatements of hazards before any complaint is made to OSHA or before any accident leading to serious injury occurs.
“It is prudent for any employer working on a multi-employer worksite to assume that they may get cited whenever there is an alleged violation,” says Jeffrey Tanenbaum, a member of the labor and employment practice of law firm Nixon Peabody and chair of its OSHA practice.
Thus, the corporate entity will want to include language in its contracts that defines in advance of a potential hazard who is responsible for what safety and health compliance activities, he says. That will help avoid any hazards from falling between the cracks.
All employers—both franchisors and franchisees—should also know their rights when faced with an OSHA inspection. “A lot of times, employers don’t know what their rights and responsibilities are when dealing with an OSHA inspection,” says Michael Taylor, a partner with law firm BakerHostetler. For example, OSHA doesn’t have a right to mandate that employees’ interviews are videotaped or audio recorded, he says.
Employees also have a right to decline to be interviewed; request a third-party witness to be present; and to refuse to give a statement or sign any documents after an interview.
As OSHA continues to ramp up its efforts from an enforcement and regulatory standpoint, it’s more important than ever before for companies across all sectors to perform annual safety audits, says Jonathan Snare, former deputy solicitor of labor at the Department of Labor and now a partner in the law firm Morgan Lewis. “Do you need to hire another safety manager? Do you need to do more audits of certain departments to make sure they have a handle on safety issues?” he says.
Lastly, because OSHA is also stepping up its oversight of companies’ recordkeeping obligations, Snare further advises that employers also should ensure that they have an understanding of OSHA’s recordkeeping requirements as it concerns work-related injuries and illnesses.